Archive

Alongside other conservative and libertarian organizations, we at CFIF have been highlighting the clear and present danger of Nancy Pelosi’s (D – California) proposed healthcare legislation H.R. 3 in letters to Congress and commentaries.

Pelosi’s bill includes an astonishing 95% tax on total pharmaceutical sales – not on profits, but sales – for private companies that don’t play ball to Pelosi’s satisfaction. Her proposal would also impose foreign price controls, completely restructure the popular Medicare Part D program, and create a compulsory arbitration mechanism overseen by government bureaucrats… Pelosi’s legislation would jeopardize nearly $1 trillion in U.S. pharmaceutical investment, undermine patent protections, suffocate drug innovation and ultimately punish consumers. That’s far too high a price to pay, and responsible members of Congress must therefore stop Pelosi’s bill in its tracks.”

Now, a new nonpartisan Congressional legal analysis suggests that it’s also likely unconstitutional. In fact, the report cites three separate provisions of the Constitution that Pelosi’s effort to commandeer Americans’ healthcare choices under federal bureaucrats’ control:

The Program created by Title I raises a number of legal considerations. First, because the negotiation under the Program is intended to lower the prices manufacturers can charge for certain selected, single-source drugs, the Takings Clause of the Fifth Amendment may be implicated. Second, the Program’s enforcement mechanisms – the excise tax and civil monetary penalties – may raise questions relating to the scope of Congress’s taxing power and the Excessive Fines Clause of the Eighth Amendment. Third, the Program’s limitation on judicial review may prompt questions regarding Congress’s powers to limit the subject matter jurisdiction of Article III courts. Finally, in setting forth the parameters of the Program, the language of Title I may implicate certain statutory interpretation questions.”

There’s reason enough for Congress to resolutely reject Pelosi’s H.R. 3 due to the negative impact that her proposal would inflict upon Americans’ healthcare, our world-leading pharmaceutical innovators and our healthcare industry more broadly. The fact that it’s likely unconstitutional offers another reason to avoid the protracted sort of legal battles that would ensue, so that Congress can work toward solutions that actually improve American healthcare, like stronger patent protections and free-market principles.

In just over two months at the end of this calendar year, the Satellite Television Extension and Localism Act (STELA) is once again set to expire, pending reauthorization.

Although the law probably remains unfamiliar to most Americans, it governs the way in which people who live beyond the reach of broadcast signals can retain access to local television programming. In addition to ensuring continued local programming access, however, the reauthorization process underway in Congress offers an opportunity to finally institute badly-needed free market reforms to the law as it currently exists.

For those unfamiliar with STELA, here’s a brief primer and an explanation of why the current reauthorization process is so critical.

When the Cable Act became law in 1992, the overriding fear among voters and legislators was that cable operators might leverage monopoly power to block local broadcast stations in their respective areas. Consequently, the law artificially tipped the regulatory scales in favor of broadcasters by granting them the right to guaranteed carriage or the right to compel cable operators to pay stations for consent to retransmit their broadcasts to local subscribers. Then, in 2010 when STELA was enacted, it unfortunately maintained many of those outdated 1992 Cable Act rules.

Now, almost three decades later, the American television consumer marketplace is much more competitive and no longer resembles its 1992 state of affairs.

Among other changes over the past three decades, consumers now possess innumerable options in channel selection and the means to access them, from cable to fiber optics to online services to multiple satellite and cable providers.

Despite that evolution, however, the government-imposed advantage for broadcasters remains. Multi-channel video programming distributors (MVPDs) like cable, satellite and fiber providers are prohibited under current regulations from disconnecting service during sweeps week, but broadcasters remain free to do the exact same thing during such events as a World Series or Super Bowl in which the local team is playing.

Accordingly, broadcasters maintain their government-created negotiating advantage through the retransmission consent rules, and are guaranteed a place on cable companies’ basic tier. That tipping of scales has resulted in consumers suffering service disruptions and cost increases. In fact, we’ve witnessed record blackouts already this year.

But as referenced above, the current STELA reauthorization process provides the perfect opportunity for Congress to do something about it, and allow greater negotiating balance and a more even playing field. At a minimum, Congress can finally end the unfair prohibition against MVPDs disconnecting service during sweeps week if necessitated by a negotiating impasse with intransigent broadcasters, as well as broadcasters’ government-granted right to placement on cable companies’ basic tier, which it appears ready to do.

The bottom line is that federal government shouldn’t be playing favorites or tipping the scales in an ever-evolving consumer television marketplace like ours, and STELA reauthorization provides the perfect opportunity to correct those existing defects.

From Forbes, our image of the day captures nicely the mainstream media’s credibility problem, as their cries of “Wolf!” accumulate. Simultaneously, it captures how three institutions most intertwined with conservative values – the military, small business and police – remain atop the list of public esteem.

In the ongoing debate over healthcare reform, it’s important to keep our collective eye on the ball. In that vein, as CFIF has repeatedly emphasized, we must ensure that free market principles prevail, and that includes protecting patent rights rather than weakening them. Otherwise, American consumers will pay the price in fewer pharmaceutical innovations, shortages and worse health outcomes.

After all, as we’ve often pointed out, it’s not by accident that the United States accounts for an astonishing two-thirds of all new pharmaceuticals in the world. That reflects the fact that we lead the world in intellectual property (IP) protections and avoid the destructive price controls that nations favoring socialized medicine impose. As a consequence, patients in those countries don’t receive the new lifesaving and life-enhancing drugs that we do.

Unfortunately, there’s bad news to report in that regard, as Representative David Cicilline (D – Rhode Island) has introduced the misnamed “Affordable Prescriptions for Patients Through Promoting Competition Act.” Most conspicuously, his proposal would begin prohibiting patent protections for pharmaceutical innovators developing improvements to their existing products.

Here’s why this is important. Existing laws that have made us the most innovative nation in history allow for patent protection for new and useful improvements to existing pharmaceuticals. Such improvements can help patients in such ways as eliminating side effects, reducing the necessary frequency or dosage, enhancing potency, boosting effectiveness or even addressing other illnesses beyond the drug’s original purpose.

But if innovators can no longer expect patent protections for the billions of dollars and years of hard work invested in developing them, then those innovations will begin to dry up. Developing new or improved drugs typically requires over 10 years, and only approximately 10% of new discoveries actually make it to market after regulatory approval. Accordingly, we must enhance the prospect that the fruits of innovators’ labors will be obtainable, not diminish them.

Representative Cicilline’s proposed bill is therefore a potentially catastrophic one for American consumers, who rely upon pharmaceutical innovators more and more to save lives and maintain health. We therefore call upon all Members of Congress to oppose it.